The Business of Web Series: What are the Returns on Online Episodic Content — Monetary or Otherwise?

In early 2016, comedian Louis C.K. released his original series Horace & Pete exclusively on his website, louisck.net.

Users paid per episode; there were 10 in total, each varying in length and cost. C.K. produced, directed, wrote, distributed, financed the series, and starred as Horace alongside Steve Buscemi, Edie Falco and Alan Alda.

The unorthodox format made C.K. determined to self-produce; he invested a reported $2 million into the episodes, which boast high production values, shot with four broadcast cameras and a state-of-the-art control room. But the direct-to-consumer sales came in way under the comedian’s projections, and in April C.K. announced that the weight of debt he was shouldering was starting to hurt.

This was sobering news for moviemakers inclined toward creating online episodic content, and begs the question: Are web series worth the financial investment? Sure, C.K. was operating on a more expensive scale than many, but for creators who lack his considerable fanbase, is there any hope for a positive cash outcome? And if not, what are the non-financial benefits that justify the considerable time and money that go into such a project?

We asked several moviemakers who’ve created and distributed web series—some of whom actually tried to turn a profit, some of whom largely eschewed the financial aspect—in order to get a handle on costs and returns.

First—How Are Web Series Monetized?

Most indie creators fund and monetize web series through AdSense and pay-per-view or subscription-based Video on Demand (VOD).

“From a revenue point of view, posting on YouTube with AdSense is the best,” said Brent Kado, a filmmaker and executive director of Chicago Comedy Film Festival, who teaches a course on developing online and mobile media content at Columbia College Chicago. “The perception is that YouTube is for amateurs, but YouTube has a built-in audience. People are on there to watch videos. So grab them and bring them to your network.”

YouTube is, by far, the most widely used video-sharing platform on the web, with a large international reach. Its program AdSense enables ads on videos and channels. YouTube’s algorithm determines the amount of money these ads generate, based on the number of clicks, the popularity of the content, and/or the length of time users watch the content. Filmmakers control the type, format and placement of the ads with no set-up fee. YouTube bills the advertisers directly and pays the filmmaker after he or she reaches a minimum threshold, also set by an internal formula.

On average creators receive $1 per 1,000 views, although this is by no means set in stone: “YouTube changes its policies and formulas all the time,” said Kado. “YouTube’s popularity means more competition for viewers and the revenue can be very low. Even a million views would not necessarily generate enough for a series to make a profit.”

With VOD platforms, viewers either pay a monthly subscription for video content or can buy or rent individual videos. One of the platforms dominating the VOD space is Vimeo on Demand, which acquired VHX, another VOD platform, in May. Vimeo offers a 90/10 revenue split (90 to the filmmaker); other VOD services, like Pivotshare, offer 70/30. YouTube itself launched its own subscription-based service, YouTube Red, earlier this year, which removes ads for paid viewers; revenue is split with creators based on their content’s “watch time.”

Case Study 1: Bad Timing

Shooting of season two of Bad Timing commenced in early 2016. Courtesy of YouTube’s Goldentusk

Andy Goldenberg, a comedian based in L.A., set his series Bad Timing, which he wrote, edited and starred in, during a zombie apocalypse. In it, an IT guy and the woman of his dreams are the last people on the planet.

The first season contains 15 episodes, each three to five minutes in length, which Goldenberg released weekly in 2014. He also posted outtakes, behind-the-scenes footage, and held a live Google Hangout each week that the show aired. Bad Timing was nominated for Best Indie Series by the web video-honoring Streamy Awards. Goldenberg’s team began filming Season 2 in February 2016.

Funding Breakdown

Costs for Season 1

Approx. $10,000. This includes production, post, advertising and film festival submissions

Funding

Indiegogo campaigns that raised almost $7,000; self-funding for the rest

Earnings Breakdown

Monetizaton

YouTube AdSense

Platforms

YouTube, Vimeo, Funny Or Die

Earnings

Approx. $400 (A loss of $9,600)

The Upshot

“YouTube is an amazing training ground,” said Goldenberg. “It’s a huge, vocal community that has supported me. I got a lot out of my series—film festivals, friendships, new contacts, lessons learned.”

Case Study 2: BROTHERS

By writer/ director Emmett Jack Lundberg and producer Sheyam Ghieth, BROTHERS is a dramedy, shot docu-style, about four transgender men and their intersecting lives in Brooklyn. All are played by transgender male actors. The pilot and season one (seven episodes) was released in 2014. The series moved from YouTube to Amazon Prime in February 2016 with the help of a distribution company who reached out to them.

Director Emmett Jack Lundberg and DP Chris Rodriguez on the set of BROTHERS. Courtesy of BROTHERS Series

The series has partnered with Outspeak, an online video network from The Huffington Post and BroadbandTV, and is accessible on Outspeak’s YouTube channel. Lundberg and Ghieth have also engaged their audience by screening at colleges around the U.S., sponsored by various campus groups.

Funding Breakdown

Costs for Season 1

$23,000

Funding

Indiegogo campaign that raised $15,000 ($2,000 of this went to Indiegogo-related fees); $10,000 self-funded for post-production, festivals, legal fees, etc.

Earnings Breakdown

Monetization

Vimeo on Demand, Amazon Prime, partnerships, speaking engagements

Platforms

Vimeo on Demand, Amazon Prime, YouTube (on Outspeak’s channel)

Earnings

$100 from January on Vimeo on Demand; revenue from speaking engagements. Amazon Prime earnings forthcoming (the platform pays a few cents per episode view)

The Upshot

“Being able to put my own experience out there so others can connect with it has been incredible,” said Lundberg. “Trans men have hardly ever seen themselves on screen before in narrative film. People have been reaching out to us.”

Case Study 3: Business Time

From writer/co-producer/actor Alex Herrald, director/co-producer Kristopher Knight and actor Curran Connor, Business Time, an absurdist comedy series, follows Gene and Gene, two office workers in cubicles bantering about business. The show has one season of seven episodes, each five to seven minutes long (with one just a minute and a half). The team is in the process of writing season two.

Alex Herrald and Curran Connor, the creators and stars of Business Time. Courtesy of Alex Herrald

Funding Breakdown

Costs for Season 1

Approx. $1,500 for food, art, costumes, editing and music. “Everyone worked for free and used their own equipment,” Herrald said. “The biggest expense was our wrap party in Williamsburg!”

Funding

Self-funded

Earnings Breakdown

Monetization

The team decided not to monetize the series. “We looked into a few partnering and revenue split models, but some of them would have forced us to change our creative concept,” Herrald said.

Platforms

YouTube

Earnings

None

The Upshot

“This is the first thing that I’ve ever written, produced and acted in. I’m braver now. I see it as a calling card for what I can create,” said Herrald.

Case Study 4: Allston Xmas

Allston Xmas is a comedy web series from Boston-based filmmakers Kenice Mobley, Melissa McVay and Jared Vincenti, about Boston’s annual September 1st move-in day, when the volume of people moving on the same day yields free things left on city streets for the taking. The show launched in 2014 with one season of 12 episodes, each four to nine minutes in length. The series included a total of 23 actors and 25 crew members, and was shot from August to October 2013.

Kickstarter campaign that earned approx. $6,000; self-funding for the rest

Earnings Breakdown

Monetization

The team decided not to monetize the series. “Allston Xmas is about free stuff circulating and we wanted to be true to that spirit,” said Vincenti.

Platforms

Vimeo

Earnings

None

The Upshot

“We learned a lot for our future work. Our concept, where each episode stands alone with different characters, was tough to execute,” said Vincenti. “Next time, I’ll structure it to be kinder to the production team!”

End Goal: Acquisition

It shouldn’t surprise that most series creators seem to hope that a larger, traditional distributor eventually picks up their work, developing it into a full TV show or feature. The Misadventures of Awkward Black Girl from Issa Rae, for instance, ran on YouTube beginning in 2011, until, in 2015, HBO brought Rae aboard for a spin-off show. Online all-star Broad City, created by Abbi Jacobson and Ilana Glazer in 2009, moved to Comedy Central in 2014 in the form of half-hour episodes. And the acclaimed marijuana-centered High Maintenance, released for free on Vimeo in 2012, was “picked up” by Vimeo on Demand in 2014, available to subscribers only; HBO then acquired the series in 2015.

“When a series is picked up, the company is essentially buying your fanbase,” said Kado. Translation: A series’ social media numbers serve as a quantifiable measure of its potential in the market—perhaps the best reason to put stuff out at a loss initially, in the hopes of gaining clout.

That’s the strategy that moviemakerKatie Tibaldi has chosen. For their series Seeking Sublet, Tibaldi and her producing partners Josie Chai and Cailley Frank-Lehrer set clear goals and gave themselves time to get to know their audience. “We didn’t want to rush it. We want to start building our audience before rolling it out,” Tibaldi said of her social media strategy. The team posted a one-minute trailer and 21 teasers (each around three minutes long) on Funny Or Die. Tibaldi estimates that these videos have generated more than 100,000 views in total. On Twitter, the creators re-tweet terrible roommate stories. On Tumblr, they post gifs from their footage, and on Instagram they post more videos. Each lead character has a Pinterest page with information about roommate survival tips.

The team raised over $20,000 on Kickstarter and self-funded (along with actor Charlie Wilson) the rest. They began their search for a distributor while shooting. “We have done a lot of research on distribution and reached out to new platforms. It’s influencing our release and festival strategy,” Tibaldi said. The nine episodes, yet to be released, will be seven to 10 minutes each. Tibaldi is betting that her slow-burn strategy and hard work pays off. As talks with distributors heat up, time will tell.

So… Why Make a Web Series?

Web series creators take their ideas and careers into their own hands, instead of waiting for someone else to green light them. “We didn’t want to wait or answer to anyone. We did what we wanted,” said Sheyam.

As TV and feature cinema continue to elide, so are web series gaining a foothold amongst more traditional prestigious media. Film festivals recognize their value. “Our web series section is always sold out,” said Kado of his festival, which in 2012 added the category. “Series creators and followers want to see the work on the big screen.”

“Web series bridge the gap between technology and outreach, a crucial intersection for indie filmmakers,” said Drea Clark, senior programmer at June’s L.A. Film Festival, which, for the second year in a row, has a dedicated web series program. “[Festivals] are about finding and supporting talent—and web series are it.”

A series can raise a filmmaker’s profile, be a test case before taking a creative risk, and reach audiences often overlooked by traditional media. Voices marginalized in mainstream media find an audience more easily than ever: Take for example The Outs from Adam Goldman about the LGBT community, or My Gimpy Life by wheelchair-bound actress Teal Sherer. Comedy, particularly from female comics, has taken on a new life online—look at Broad City’s Jacobson and Glazer, whose comedic careers have exploded in the wake of the series’ success.

“Filmmaking is about making a human connection,” said Lundberg, “and you can’t quantify that.” MM

This article appears in MovieMaker’s Summer 2016 issue, currently on newsstands.

1 Comment

You guys need to do a deeper dive into the economics of web series. There are a whole host of distributors who buy shows jay the development stage ust like tv networks. The money is not the same as tv but it is viable and I’ve built a whole business on making the series I sell (4 in the past few years to places like DreamWorks tv and defy media) and for others who have done the same. It’s not easy but it’s much easier to sell in this space than for tv. And you get the added benefit of not only making a living but actually having millions of people see your work. It’s hard to break thru the noise without marketing muscle. Show people other ways to breaking through.

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